Market recap: Fourth quarter 2021
We take a look at the S&P 500 Index, Russell 3000 Index, and others, along with the U.S. equity, non-U.S. equity, and U.S. fixed income.
CMS has identified radiation therapy (RT) services as a potential area of improvement given the current lack of site neutrality, incentives that reward volume rather than quality of service, and complexity in coding and payment.4 To address these shortcomings, CMS has developed the RO model, which will be mandated for providers in randomly selected core-based statistical areas (CBSAs). The program will run for five "performance years" (PYs), with the first performance year spanning from January 1, 2022, through December 31, 2022.
Participants in the program will receive prospective episode-based payments for certain radiation therapy services furnished during 90-day episodes of care for 15 cancer types commonly treated with RT (listed below).
Payments will be determined using national base rates trended and adjusted for each provider, including adjustments based on quality of care. Note that these payments will replace the Medicare fee-for-service (FFS) payments that were historically provided for select radiation therapy services5 provided during the 90-day episodes of care described above.
Program participation will be mandated for providers of RT care (i.e., physician group practice, freestanding RT center, or hospital outpatient department) in the selected CBSAs and the linked 5-digit ZIP Codes.6
Participants in the program will be considered either professional participants, technical participants, or dual participants. Professional participants are Medicare-enrolled physician-group practices that deliver only the professional component (PC) of RT services. These participants will be identified by their Taxpayer Identification Number (TIN). Technical participants are hospital outpatient departments (HOPDs) or freestanding RT centers identified by their CMS Certification Number (CCN) or TIN and deliver only the technical component (TC) of RT services. Dual participants deliver both professional and technical components of RT care. Though enrollment in the program is mandatory, providers with a low volume of RT services (fewer than 20 episodes in one or more of the CBSAs selected for participation during the most recently available CY of claims data) can decide to opt out.
Providers participating in the model will be considered Qualifying Alternative Payment Model Participants (QPs) in PY1 (CY2022), which means that they will be eligible for a 5% bonus on Part B payments and will be excluded from Merit-based Incentive Payment System (MIPS) reporting requirements.
Although the total payment amount is prospectively determined, half of the amount will be paid at the initiation of the episode and the other half will be paid at the conclusion. The rates are developed through the following high-level process:
1. Develop national base rates
2. Apply trend to PY
3. Apply case mix, historical experience, and geographic adjustments
4. Apply discount factor
5. Apply withholdings
6. Adjust to apply stop-loss as well as remove member coinsurance and sequestration
For providers that are required to participate in this model beginning in 2022 (based on their locality), this payment structure may have a significant impact on their Medicare payments. Fortunately, providers can analyze their historical (and current) claims patterns to understand how their payments could be impacted under the RO model and whether there are ways they can mitigate these changes while still providing evidence-based care to patients.
Providers can take the following steps to understand the impact of the RO model on their payments, and identify whether there might be relevant opportunities to shift their patterns of care:
The Radiation Oncology model has been in the works for several years and is set for implementation in CY2022. The site-neutral payment structure represents a significant change in how radiation oncology is paid for in the Medicare FFS program and is indicative of a larger shift within CMS toward risk and episode-based payments. It is essential that organizations providing radiation oncology services within the selected areas understand how this change could directly impact their Medicare payments.
1 The full text of the proposed rule is available at https://www.federalregister.gov/documents/2019/07/18/2019-14902/medicare-program-specialty-care-models-to-improve-quality-of-care-and-reduce-expenditures.
2 The full text of the rule as of September 29, 2020, is available at https://www.federalregister.gov/documents/2020/09/29/2020-20907/medicare-program-specialty-care-models-to-improve-quality-of-care-and-reduce-expenditures.
3 The full text of the final rule is available at https://www.federalregister.gov/public-inspection/2021-24011/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment.
4 U.S. Department of Health and Human Services (November 2017). Episodic Alternative Payment Model for Radiation Therapy Services. Report to Congress. Retrieved November 26, 2021, from https://innovation.cms.gov/files/reports/radiationtherapy-apm-rtc.pdf.
5 CMS. Included RT Services HCPCS Codes. Retrieved November 26, 2021, from https://innovation.cms.gov/media/document/ro-model-rt-hcps-codes-aug-2021 (Excel download).
6 CMS. Participating ZIP Code. Retrieved November 26, 2021, from https://innovation.cms.gov/media/document/ro-model-participant-zip-code-list-july-2021 (Excel download).
An introduction to the Radiation Oncology model
The model was designed to test whether bundled, prospective, site-neutral, episode-based payments for radiation oncology services could lower Medicare expenditures while improving the quality of care.